Standard & Poor’s, which downgraded the U.S. debt earlier this month, is rating a set of subprime mortgage securities as AAA, a notch above the U.S. credit rating of AA+.
Bloomberg is reporting that S&P awarded the top rating to a group of bonds tied to $497 million lent to homeowners with below-average credit scores and “almost no equity in their properties.” Most of the mortgages of Springleaf Finance Corp., which created the securities, are categorized as subprime or nonprime loans, according to Hoover’s. Springleaf is based in Evansville, Indiana.
S&P downgraded U.S. sovereign debt to AA+ on Aug. 5, resulting in criticism and scrutiny of the ratings agency and a swoon and in world stock prices.
S&P said the downgrade reflected its opinion that Congress’ U.S. deficit consolidation deal “falls short” of what is needed to “stabilize the government’s medium-term debt dynamics.”
The ratings firm defended its grade on the subprime mortgages in a statement to Bloomberg.